Novatel Wireless Reports Record Third Quarter Results
Wednesday October 26, 4:15 pm ET
Revenues Increase 36% Year over Year -- GAAP Net Income of $0.18 per Share
SAN DIEGO--(BUSINESS WIRE)--Oct. 26, 2005--Novatel Wireless, Inc. (Nasdaq:NVTL - News), a leading provider of wireless broadband access solutions, today reported financial results for the third quarter ended September 30, 2005.
Revenues for the third quarter were $42.1 million, which is a 36% increase over $31.0 million reported in the same period last year. Third quarter GAAP net income of $5.5 million or $0.18 per diluted share includes a tax benefit of $2.4 million, or $0.08 per diluted share recognized during the third quarter related to the reduction of the valuation allowance on our U.S. deferred tax assets. This compares to non-taxed GAAP EPS of $4.9 million or $0.16 per diluted share in the prior year period.
During the third quarter, it was determined that specific deferred tax assets should be recognized in accordance with FAS 109 resulting in a third quarter tax benefit in the Statements of Operations of $2.4 million and an additional credit to Stockholders' Equity of $4.0 million relating to the reduction of the valuation allowance on stock option deductions.
"Third quarter revenues rose 36% year over year to the highest level in Company history," commented Peter Leparulo, Novatel Wireless' Chief Executive Officer. "Our record revenues were driven by the expansion of our PC card business and a strong performance for our newly introduced Ovation product line. Domestically, our EV-DO PC card business grew by over 22% sequentially, benefiting from our growing shipments to Verizon Wireless and our first full quarter of volume shipments to Sprint. Internationally, we expanded on our relationship with the world's largest carrier -- Vodafone -- and we are now shipping to 14 of its operating subsidiaries. We were again pleased with our significant traction in fixed-mobile convergence. In only its second quarter since introduction, Ovation grew 20% sequentially, contributing 11% of overall revenues. Sales were driven by initial shipments of the Ovation MCU1200 -- the first of its kind with integrated voice and data directly addressing fixed-mobile convergence. We continue to work closely with our two current Ovation customers -- O2 and Vodafone -- on both our current product offerings and upcoming versions of Ovation that will significantly enhance both form and functionality."
"As we enter the fourth quarter, we are positioned to take advantage of the continued growth of our market with the broadest product line, deepest technology and a customer base comprised of the vast majority of leading operators," continued Mr. Leparulo. "We are in an enviable position as we remain the only company in our market shipping both UMTS and EV-DO technology and, by the end of Q1, we will have significant revenues from all three legs of our growth strategy -- PC cards, OEM and fixed-mobile convergence. In PC cards, we will continue to expand our product offering and customer base. In the OEM market, we now expect to launch with multiple leading laptop manufacturers throughout 2006 and currently believe that we have captured the largest percentage of OEM deals available for the upcoming year. Finally, in fixed mobile convergence, we will continue to commercialize platforms and applications that allow users to control their entire communications environment from a single integrated platform. Given this, we believe we will continue to be a true global partner of choice with multiple products, technologies and form factors at the leading carriers and platform manufacturers throughout Europe and the United States."
Recent highlights during the quarter include:
September
The Company announced initial shipments of the Merlin U740, a HSDPA-Enabled PC Data Card, to European carriers. The Merlin U740 is designed to operate on HSDPA networks as coverage becomes available from the carriers. The PC Data Card is backward compatible with existing UMTS networks in Europe and Enhanced Data Rate for Global Evolution (EDGE) networks worldwide.
The Company announced it had been awarded a patent for a Wireless Radio Frequency Modem which increases its patent portfolio to 28 issued patents with several significant patent applications currently pending.
The Company announced initial commercial shipments of the first voice and data Ovation 3G Multimedia Application Console, the Ovation MCU1200.
The Company announced a partnership with Mobitel to deliver Slovenia's first quad band UMTS PC Card, the Merlin U630.
The Company and Siemens Communications agreed to work together on producing end-to-end solutions for HSDPA, and to collaborate on joint marketing activities.
August
The Company was named a Deloitte Technology Fast 50 finalist in San Diego, whose rankings are based on the percentage revenue growth over five years from 2000-2004.
The Company was awarded CE certification for the first voice and data Ovation 3G Multimedia Application Console, the Ovation MCU1200.
July
The Company and Alcatel announced that they had completed thorough interoperability tests between Alcatel Evolium radio access infrastructure and the Novatel Wireless Merlin U740 PC Card to enable mobile operators worldwide to undertake live HSDPA field introductions.
The Company announced that the Merlin V620 received the industry's first EV-DO PC Card approval for network driver interface from the Windows Hardware Quality Labs.
"Gross margins improved to 31.2% despite continued softness of the Euro," explained Dan Halvorson, Chief Financial Officer of Novatel Wireless. "In the fourth quarter, we expect gross margins to be flat as we look to expand our installed base in UMTS, while simultaneously rolling out next generation products. Our sales momentum continues and, in the upcoming fourth quarter, we expect revenues to grow strongly sequentially to the range of $48 to $50 million with GAAP earnings of $0.13 to $0.14 per diluted share."
Novatel Wireless will host a conference call for analysts and investors to discuss its quarterly results at 5:00 p.m. ET on October 26, 2005. A live Web cast of the conference call will also be accessible from the "Investor Relations" section of the Novatel Wireless Web site (www.novatelwireless.com). Following the live Web cast, an archived version will be available on the Novatel Wireless Web site. |
